Viacom18 Media Private Limited– Update on Material Event Rationale
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April 29, 2021 Viacom18 Media Private Limited– Update on Material Event Summary of rating(s) outstanding Previous Rated Amount Current Rated Amount Instrument* Rating Outstanding (Rs. crore) (Rs. crore) Commercial Paper Programme 500.0 500.0 [ICRA]A1+ Short-term, Fund-based/Non 1,610.7 1,610.7 [ICRA]A1+ fund based Limits Total 2,110.7 2,110.7 *Instrument details are provided in Annexure-1 Rationale On February 17, 2020, Network18 intimated the stock exchanges regarding a scheme of amalgamation and arrangement amongst Network18, TV18, DEN Networks Limited (DEN) and Hathway Cable & Datacom Limited (Hathway). Under the scheme, DEN, Hathway and TV18 were to merge into Network18 with effect from February 1, 2020, subject to receipt of necessary approvals to consolidate Reliance Industries Limited’s (RIL, rated [ICRA]AAA (Stable) / [ICRA]A1+ and Baa2 Stable by Moody’s Investors Service) media and distribution business spread across multiple entities into Network18. The company again announced on April 20, 2021 that considering more than a year has passed from the time the Board considered the Scheme, the Board of the Company has decided not to proceed with the arrangement envisaged in the Scheme. ICRA has taken cognizance of the above and the rating remain unchanged at the earlier rating of [ICRA]A1+ as the parent company, TV18 would continue with the existing corporate structure. Please refer to the following link for the previous detailed rationale that captures Key rating drivers and their description, Liquidity position, Rating sensitivities,: Click here Analytical approach Analytical Approach Comments Corporate Credit Rating Methodology Applicable Rating Methodologies Rating Methodology for Media Broadcasting Industry Impact of Parent or Group Support on an Issuer’s Credit Rating Parent / Group Company: RIL Group. IMT, of which RIL is the sole beneficiary, holds a majority stake in Network18, which has a 51.17% stake in TV18. Viacom18 is a step subsidiary of Network18. Parent/Group Support ICRA expects the RIL Group to continue extending timely financial support to Network18 Group, should there be a need, as they are a key player in the media value-chain that RIL is focusing on. The rating is based on the consolidated financial profile of the company. The list Consolidation/Standalone of entities considered for consolidation as on March 31, 2021, is provided in Annexure-2. www.icra .in Page | 1 About the company Incorporated in 1995, Viacom18 Media Private Limited is a 51:49 JV between TV18 Broadcast Limited and Viacom Inc. On February 28, 2018, TV18 increased its stake in Viacom18 to 51% from 50%, thereby making it a subsidiary of the company. Viacom18 is present in the television broadcasting space with a presence across the Hindi GEC space and niche genres such as youth, kids and English GEC. In the Hindi GEC space, it operates channels such as Colors, Colors HD, Colors Rishtey and Rishtey Cineplex, while it is present in the English GEC segment through Comedy Central, Vh1 and Colors Infinity. In the youth genre, it has channels such as MTV and MTV Beats; while in the children’s genre, its portfolio is represented by channels such as Sonic, Nickelodeon and Nick Jr. During September 2016, Viacom18 concluded the merger of Prism TV (a JV between Nickelodeon Asia Holdings Pte Ltd, a Viacom Inc. company, and TV18) with itself, effective from April 01, 2015. This added five RGECs – Colors Kannada, Colors Marathi, Colors Bangla, Colors Gujarati and Colors Oriya to Viacom18’s portfolio. Furthermore, the company launched a second Kannada GEC, Colors Super in July 2016. The company also launched its Tamil regional GEC, Colors Tamil and its high definition (HD) feed during February 2018. It introduced a second movie channel and its first regional movie channel, Colors Kannada Cinema, in September 2018. The company launched two more regional movie channels, Colors Gujarati Cinema in February 2019 and Colors Bangla Cinema in June 2019 to further strengthen its regional presence. Viacom18 also has a presence in the film production and distribution business under a division, Viacom 18 Motion Pictures. In addition to domestic film production and distribution, the company is also the sole distributor of all Paramount films in the Indian subcontinent. IndiaCast Media Distribution Pvt Ltd (IndiaCast), a JV between Viacom18 and TV18, is a content asset monetisation company, which manages the distribution and monetisation of the company’s international business. Key financial indicators (audited) LTHL Consolidated FY2019 FY2020 Operating Income (Rs. crore) 3,664.9 3,871.7 PAT (Rs. crore) 80.5 353.6 OPBDIT/OI (%) 5.5% 14.7% PAT/OI (%) 2.2% 9.1% Total Outside Liabilities/Tangible Net Worth (times) 1.8 1.6 Total Debt/OPBDIT (times) 3.7 1.7 Interest Coverage (times) 4.2 7.4 PAT: Profit after Tax; OPBDIT: Operating Profit before Depreciation, Interest, Taxes and Amortisation Source: Viacom18, ICRA Research Status of non-cooperation with previous CRA: Not applicable Any other information: None www.icra .in Page | 2 Rating history for past three years Instrument Current Rating (FY2022) Chronology of Rating History for the past 3 years Type Amount Amount Date & Rating Date & Rating in Date & Rating Date & Rating in FY2019 Rated Outstanding in FY2021 in FY2020 (Rs. (Rs. Crore) crore) Apr 29, 2021 Nov 09, 2020 Feb 28, 2020 Dec 07, 2018 Jan 06, 2020 1 Commercial Short-term 500.00 - [ICRA]A1+ [ICRA]A1+ [ICRA]A1+ [ICRA]A1+ Paper Programme 2 Fund-based / Short-term 1,575.00 - [ICRA]A1+ [ICRA]A1+ [ICRA]A1+ [ICRA]AAA (Stable) Non-fund Withdrawn/ [ICRA]A1+ Based Limits 3 Fund-based / Long- 0.0 - - - [ICRA]AAA [ICRA]AAA (Stable) / Non-fund term/Short- (Stable) [ICRA]A1+ Based Limits term Withdrawn/ [ICRA]A1+ 4 Unallocated Short-term 35.7 - [ICRA]A1+ [ICRA]A1+ [ICRA]A1+ [ICRA]AAA (Stable) / Limits [ICRA]A1+ Complexity level of the rated instrument ICRA has classified various instruments based on their complexity as "Simple", "Complex" and "Highly Complex". The classification of instruments according to their complexity levels is available on the website click here www.icra .in Page | 3 Annexure-1: Instrument details ISIN No Instrument Name Date of Coupon Maturity Amount Rated Current Rating and Issuance / Rate Date (RS Crore) Outlook Sanction NA Overdraft / Working Capital NA NA NA 1,575.00 [ICRA]A1+ Demand Loan / Letter of Credit / Bank Guarantee NA Short-term Unallocated NA NA NA 35.7 [ICRA]A1+ Limits Yet to be placed Commercial Paper NA NA NA 500.0 [ICRA]A1+ Programme Source: Company Annexure-2: List of entities considered for consolidated analysis (As on March 31, 2021) Company Name Ownership Consolidation Approach Viacom18 Media (UK) Limited 100.00 Full Consolidation Viacom18 US Inc 100.00 Full Consolidation Roptonal Limited 100.00 Full Consolidation Indiacast Media Distribution Private Limited 50.0 Equity Method Source: Company www.icra .in Page | 4 ANALYST CONTACTS Shubham Jain Rajeshwar Burla +91 124 4545 306 +91 40 4067 6527 [email protected] [email protected] Jay Sheth Rohit Agarwal +91 22 6114 3419 +91 022 6169 3329 [email protected] [email protected] RELATIONSHIP CONTACT L Shivakumar +91 22 6114 3406 [email protected] MEDIA AND PUBLIC RELATIONS CONTACT Ms. Naznin Prodhani Tel: +91 124 4545 860 [email protected] Helpline for business queries +91-9354738909 (open Monday to Friday, from 9:30 am to 6 pm) [email protected] About ICRA Limited: ICRA Limited was set up in 1991 by leading financial/investment institutions, commercial banks and financial services companies as an independent and professional investment Information and Credit Rating Agency. 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